Fortum selling 54% shares of its 185 MW PV portfolio in India

The company was adamant that it will not exit the Indian PV market, after rumors last October suggested that the company will sell its PV assets in India. Now, the company reiterates its commitment and stresses that additional funding will be used to develop new assets.

Fortum has agreed to sell 54% of its Indian PV portfolio, but stresses that it is not exiting the market.

Image: Fortum

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Fortum has signed an agreement whereby the company is to sell 54% of its 185 MW solar PV portfolio. The assets are going to be sold to UK Climate Investments (40%) and Elite Alfred Berg (14%), the latter of which has the opportunity to buy an additional 16%. Fortum will retain minority ownership of the assets and continue to provide operation and maintenance (O&M) to the sites.

The total consideration from the divestment of the 54% stake on a debt and cash free basis, including the effect of deconsolidating Fortum’s minority part of the net debt, is expected to be approximately €150 million. The positive impact on Fortum’s results from selling part of the solar portfolio will be approximately €20 million and will be booked in the M&A and Solar & Wind Development unit. The transaction is subject to regulatory approvals in the EU and is expected to close in the beginning of the third quarter 2018.

“This project demonstrates the growing maturity of India’s secondary market for renewables – creating an environment in which private investors have confidence to invest in new greenfield projects that will accelerate the decarbonisation of India’s economy,” says Richard Abel, Managing Director of UK Climate Investments.

“The agreement with Elite Alfred Berg and UK Climate Investments is an important step in our solar strategy. Our ambition is to continue the partnership also for future solar power projects. The arrangement frees up capital for further investments and enables Fortum to continue to utilise its key competencies to develop, construct and operate solar power plants in India,” says Kari Kautinen, SVP, M&A and Solar & Wind Development at Fortum.

The Indian PV market is very strong at the moment, with 25-year power purchase agreements at attractive costs being granted to successful tender bids. India added 9.1 GW in 2017, ranking it the third biggest installer after China (53 GW) and the US (10 GW). For 2018 India announced that it will add 11 GW making it the second largest solar market.

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Marian Willuhn

Covering news on power electronics, start-ups, and inverters, Marian writes for pv magazine’s International, Australian, and German online presences. He also edits the international print magazine and organizes webinars and events.

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1 comment

In terms of volumes and numbers, India has always been an attractive destination for MNCs. Yet why do MNCs opt to sell assets in India to raise investment and not direct Investment? In recent times, sale of renewable energy assets is gaining momentum and apparently lucrative too. At a time when tariff is falling, what does the new purchaser gain through acquisition of second hand assets? Theory is often rosier than reality.

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